Ports Authority v Walter Trading Company Ltd [2007] TOSC 58; CV 223 of 2006 (10 August 2007)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU'ALOFA REGISTRY

CV 223 of 2006.

BETWEEN

PORTS AUTHORITY
Plaintiff

AND

WALTER TRADING COMPANY LTD
Defendant

BEFORE THE HON. JUSTICE ANDREW

Coram: Mr. Garrett for the plaintiff and
Mr. W.C. Edwards for the defendant

Date of hearing: 2nd July, 2007.
Date of judgment: 10th August, 2007

Judgment

The Ports Authority's claim is for liquidated damages in the sum of TOP41,356.65, representing non-payment of wharfage charges.

The Plaintiff is a statutory authority set up pursuant to the Ports Authority Act, 1998 (The Act). It has wide ranging powers, inter alia, to manage the port of Nuku'alofa and to levy charges on users of the port.

The defendants are the owners of various ships trading between Nuku'alofa and within Tonga and are "owners" as defined in the act. The defendants dispute, inter alia, that the plaintiff has the power to levy wharfage charges or fees upon them.

WHARFAGE CHARGES:

Section 41 of the act provides:

41. Power of authority to levy fees.
(1) "It shall be lawful for the authority to levy fees for the use of any of its infrastructure, facilities, assets or equipment or the provision of any service provided by its employees, agents or sub contractors.
(2) Such fees shall be determined by resolution of the board and shall, subject to Section 12, come into effect 30 days after publication of such fees."

Section 42 FEES

(1) A Fee shall be payable by the owners, operators or agents of a vessel for services provided by the authority at any of the ports to which this act applies.
(2) ......
(3) ....
(4) .....

By Section 12 of the Act, the Authority has all the powers, rights and authorities necessary or expedient to enable it to exercise its functions and it has the power (section 12(2)) to issue Standing Orders or Codes of Practice in respect of (inter alia) operating or managing a port as a commercial undertaking and for that purpose it may levy such port charges, fees and rates, whatsoever arising from the management and operation of any port.

In an earlier hearing in this matter it was determined that the Authority had legal standing to bring this proceeding. There can be no dispute that the Authority is enabled to issue Standing Orders: section 12 and section 79 of the Act. That is consistent with the objectives of the authority, as outlined in section 10 of the Act and with the function of the authority as outlined in section 11 of the act.

When (as submitted) ships call at the port of Nuku'alofa or any other port they incur a number of charges. These include mooring fees (known as berthage in the case of international ships) and wharfage. "Wharfage" is a charge levied on cargo crossing the ship's side during the loading or unloading process.

I accept the evidence that the Authority decided to introduce wharfage fees for local cargoes, because the revenue from mooring fees was deemed insufficient to cover the costs of maintaining the domestic wharf and associated facilities. The authority's financial controller calculated that a charge of $7 per tonne was what was required to cover costs, but it was decided by the board of the plaintiff that the charge should be set at $3 per tonne. On the 19th of August 2003; the board resolved to make a Standing Order in respect of a wharfage charge for local cargo and the resulting Standing Order was gazetted on the 8th of September 2003. That order, issued in the exercise of the powers conferred by section 12 (2) of the act was in the following terms:

"27(1) wharfage fee for local vessels, cargo per tonne - $3.00 (the greater of weight or measurement). The Ports Authority will be responsible for the collection of wharfage fees and the minimum charge is $3.00 per revenue tonne or part thereof."

The defendant Walter Trading Co Ltd (Walter Trading) took the position that the standing order was illegal, ultra vires, unlawful and unclear and vehemently opposed paying the wharfage charge. There is no dispute the charges have not been paid. In particular, it is put that there was no imposition upon the defendants as the order does not say who is liable to pay wharfage fees.

The Authority, in response to Walter Trading's continued refusal to pay the wharfage fees promulgated an amended standing order S.27(1), which repealed and replaced the existing order. I accept that it was gazetted on the 11th of August 2006. It read as follows:

"S.27 — wharfage fee for local vessels cargo per tonne - $3.00 (the greater of weight or measurement).
The Port Society shall be entitled to levy and collect a wharfage fees from the owners or agents of ships, and the minimum charge is $3.00 per revenue tonne or part thereof."

The defendants have, despite the new standing order continued to refuse to pay the wharfage fees. They continue to claim that the authority has no legal right to claim wharfage from them. I accept the evidence that the amended standing order was gazetted, because the defendants, it says, were unable to understand or accept that it was the shipowners who were liable.

In earlier proceedings the defendants appeared to accept the right of the plaintiff to impose wharfage charges for they said:

"It is the normal function of the Ports Authority in operating and managing the wharf to collect wharfage, mooring, berthing and port fees and rates imposed by it under S.12(2)(a) of the act, 1988. Also refer to Section 11 as to its functions."

In my opinion it is unarguable that the authority has the power to levy fees for wharfage upon the owners, operators; charterers or agents of a vessel using any of it Ports, its facilities or services, by virtue of Sections 41, 42 and 43 of the Act. The defendants appear to have conceded this at the hearing but still challenge the legitimacy and enforceability of the Standing Order.

The Standing Order of the 8th of September 2003 did no more than establish the fee of $3.00 per tonne for wharfage and that the authority itself was responsible for its collection. That is not ultra vires the act, for the act established that owners of ships were liable for the fees. There is no invalidity or doubt or uncertainty as to who is liable to pay the fee. The Act clearly imposes the obligation upon the defendants to pay the fee and the standing order simply established the amount of the fee and the responsibility for its collection.

The amended standing order, gazetted on the 11th of August 2006 added only the words, "from the owners or agents of ships." In my opinion, that has not changed anything for by the operation of the act it was always the owners or agents who were liable to pay the fees. I accept the evidence that the orders were only amended because of the continued obstinacy of the defendants but the amendment made no difference to the effect of the earlier standing order, nor was it strictly necessary to clear up any ambiguity or uncertainty.

In my view, it is unarguable that a ship engaged in loading or unloading cargo at the Port of Nuku'alofa is making use of the infrastructure assets and facilities of the port and that the owner or agent of such a ship is, by virtue of sections 41 and 42 of the Act, liable for any fee imposed as a result of such usage.

The defendant says that there is no proper evidence that either the standing order of 2003 or 2006 was published in the Gazette and hence there is no proof as to their validity. There is evidence as to the fact that they were gazetted and as to their date of Gazettal. I accept on balance that both standing orders were gazetted and their validity is established.

WHARFAGE FEES.

The Plaintiff's claim was for TOP41,356.65 in unpaid wharfage fees. In an amended statement of claim the wharfage fees were said to have reached TOP85,282.53 by the eighth of February 2007 and the plaintiffs claimed damages as assessed by the court.

As stated, the defendants have not called any evidence so that the wharfage fees are hardly disputed.

I accept the evidence that in the past in order to calculate the wharfage fees due from the defendant Walter Trading Company, the plaintiff sought evidence from them of the cargo handled by them. The defendants failed to provide any information. On the 17th of February 2006, the plaintiff sought payment of outstanding fees calculated at TOP41,356.65. The defendants maintained their position that the plaintiff had no legal right to claim wharfage fees. As at the 8th of February 2007, the fees were assessed at TOP85,382.55.

I accept the evidence from the plaintiff's three witnesses, Commander Vi, Mr. Lavemai, and Mr. Hakaumotu that considerable effort had been made to obtain information from the defendants ship's master's as to cargo manifests. The defendants have refused to cooperate in any way and have behaved usually in an arrogant and abusive way, saying that the plaintiffs have no legal right to impose the charge at all as if they would decide what is the appropriate law. No one enjoys paying tax and perhaps the wharfage fees were not popular in the shipping industry, but the reality is that wharfage fees have been validly enacted. More relevantly, the defendants have not disputed the amounts owing, but have, as said, simply maintained that they are not liable to pay them. The defendants have failed to produce any records of their own so that they can hardly dispute the accuracy of the invoices prepared by the plaintiffs from the data which they have collected even though the plaintiff says they would have preferred to have the defendant's cargo manifests to check the accuracy of their cargo recordings.

I accept the evidence of the plaintiff as to the accuracy of the invoices involved. As submitted, Sika Hakaumotu gave clear and unchallenged evidence that he had generated spreadsheets from entries in a ledger book in which the cargo loaded and unloaded on the various vessels was recorded. The chief financial officer, Mr. Lavemai had supervised the various invoices and supporting documentation which had been scrutinised by the plaintiff's auditors.

Some of the invoices are based on the measurement of cargo. Under Order 27(1), wharfage fees for local vessel's cargo per tonne is $3.00 the greater of weight or measurement. There was evidence that the term revenue tonne and a cubic metre are treated as the same for charging purposes. It is a little ingenuous for the defendants to complain that the fees are charged based on measurement, when it was their own intransigence in refusing to supply any details of cargo manifests. Again they have called no evidence and have never produced any records of their own. I am satisfied that the invoices produced, Exhibits G and L were professionally based and their accuracy is not in doubt. Nor have they been challenged on any proper basis.

I am satisfied that it has been proven that the defendants are owners of vessels who are liable to pay wharfage fees. Their liability for those fees due, as at the 8th February 2007 TOP85,382.53.

For all of the above reasons is, I give judgment to the plaintiffs in the sum of TOP85,382.53.

Judgment to the plaintiff, the Ports Authority, in the sum of TOP85,382.53.

Costs are awarded to the plaintiffs, as agreed or taxed.

DATED: 10 August 2007
JUDGE